We develop a measure to capture an audit firm's competitive position in a local audit market based on the transaction costs of changing audit firms included in DeAngelo's (1981) multi-period audit pricing model. Our competition measure reflects the size difference between the largest audit firm...

We examine the role of discretionary investments that affect the production of audits of multiple clients. Given such investments and their associated joint fixed costs, the investment decision and production of audit services must be analyzed over a client portfolio, rather than on an...

In this paper, we first develop a model in which national legal environments play a crucial role in determining auditor effort and audit fees. Our model predicts that: (1) audit fees increase monotonically with the strength or strictness of a country’s legal liability regime; (2) given a legal...

When we examine all firms in the sample we find that short-term debt is positively associated with earnings management consistent with some prior studies and the debt hypothesis. However, when we focus on high creditworthy (investment grade) firms we find a negative relation between short-term...

This paper extends the literature on the determinants of environment, social and governance (ESG) dimensions of sustainability investment by examining whether low growth firms with the agency problems of high free cash flows (FCF) (Jensen, 1986) have more incentives to invest in ESG...